The buyer’s premium is a percentage added to the hammer price that the winning bidder pays to the auction house on top of their winning bid. Common rates range from 10% to 25%, depending on the platform and lot type. On a $1,000 hammer with a 15% BP, the buyer pays $1,150 total.
Buyer’s premium became standard practice in the 1970s as a way for auction houses to extract revenue from buyers without raising seller commissions. Critics argue it makes the true cost of bidding opaque (bidders mentally bid the hammer, then are surprised by the line item). Modern flat-fee platforms eliminate or reduce the BP, returning more of the buyer’s payment directly to the seller.
Sotheby’s and Christie’s introduced buyer’s premium in 1975, and the practice spread industry-wide within a decade. It now generates more revenue for major auction houses than seller commissions in many categories. Sliding scales are common: 25% on the first $1 million, 20% on the next $5 million, 15% above that. The structure incentivizes auction houses to push for high hammer prices — their cut compounds with the buyer’s. Platforms that advertise “no buyer’s premium” usually offset that with higher seller commissions or subscription fees.